Are All Trade Protection Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas

35 Pages Posted: 27 Sep 2010 Last revised: 17 Oct 2010

See all articles by Bruce A. Blonigen

Bruce A. Blonigen

University of Oregon - Department of Economics; National Bureau of Economic Research (NBER)

Benjamin H. Liebman

St. Joseph's University

Justin R. Pierce

Board of Governors of the Federal Reserve System

Wesley W. Wilson

University of Oregon - Department of Economics

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Date Written: September 2010

Abstract

Over the past decades, the steel industry has been protected by a wide variety of trade policies, both tariff- and quota-based. We exploit this extensive heterogeneity in trade protection to examine the well-established theoretical literature predicting nonequivalent effects of tariffs and quotas on domestic firms' market power. Robust to a variety of empirical specifications with U.S. Census data on the population of U.S. steel plants from 1967-2002, we find evidence for significant market power effects for binding quota-based protection, but not for tariff-based protection. There is only weak evidence that antidumping protection increases market power.

Suggested Citation

Blonigen, Bruce A. and Liebman, Benjamin H. and Pierce, Justin R. and Wilson, Wesley W., Are All Trade Protection Policies Created Equal? Empirical Evidence for Nonequivalent Market Power Effects of Tariffs and Quotas (September 2010). NBER Working Paper No. w16391, Available at SSRN: https://ssrn.com/abstract=1683141

Bruce A. Blonigen (Contact Author)

University of Oregon - Department of Economics ( email )

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Benjamin H. Liebman

St. Joseph's University ( email )

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Justin R. Pierce

Board of Governors of the Federal Reserve System ( email )

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Wesley W. Wilson

University of Oregon - Department of Economics ( email )

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United States
541-346-4690 (Phone)

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